MY REINZ statistics show NZ median house sale prices of $162,000 for
January 1998 and $178,000 for April �01 (I don�t have May�s figure), which I
would say more accurately reflect house prices than David Mitchell�s figures
(in spite of his commendably literate submission). More to the point, returns
since 1989 based on REINZ figures give a 3.4% annual increase, and 12-month
rolling average increases declining at 0.1%/month. At 1.1% in April, if this
continues they�ll flatline this time next year.
I anticipated this in 1995, got completely out of property and managed a
13% pa return over a diverse portfolio. This was possible because rents are
increasing an even lower rate than property values - the demand isn't there. I
expected the baby-boom phenomenon (of large numbers of retirees stopping
investing and reducing consumption, and drawing down on investments so causing
a long-term bear market) to occur from about 2010. But recent market movements
lead me to believe that the process has started and a market recovery won�t
occur for many years.
Look between the lines of this taxation report. Taxing property? A
horrifying thought. How much more reasonable an increase in GST and reduction
in personal income tax seems! Not to mention regressive, poverty-enhancing,
rich-enriching, society-warping, or infrastructure-damaging. Roger Douglas
never mentioned that either but still it happened. The twisted self-serving
logic of the new right that says less tax means more prosperity hasn�t yet
been exorcised despite evidence to the contrary. This review continues the
destructive Douglas theme, and his Trojan Horses in the Labour Party can�t
wait to implement the less controversial aspects of it. This country's social
statistics will steadily sink to mid-third-world status and its social
divisions deteriorate, and still Douglasites will see salvation in lower
personal and company taxes.
Chris Slater
See IRG research reports
